Entrepreneurs received good advice

21 November 2014

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Many entrepreneurs attended the Danish Bankers Association, the Danish Chamber of Commerce and FSR - Danish Auditors’ Week47-event focusing on financing. The participants were met with the following question: what makes your business worth investing in?

The entrepreneurs attending the Week47-event in Finanssektorens Hus were quite different from one another. One did freelance work for one customer, another had already built up a turnover of several million DKK.

The purpose of the event was to prepare the entrepreneurs for the meeting with the bank. The participants gained insight into which factors the banks take into account when performing a credit rating of an entrepreneur, and the auditor spoke about the conditions related to tax, business format and budgeting, that an entrepreneur must be able to manage.

Louise C. Mogensen, Deputy Chief Executive at the Danish Bankers Association, welcomed the participants and spoke about the Danish Bankers Association’s great focus on creating an even better dialogue with entrepreneurs. The entrepreneurs and the banks basically have the same interest, she said, “namely the creation of new and healthy companies, which can grow strong and create new jobs, economic growth and innovation.”

Next, the Branch Executive Officer at Jyske bank, Merete Friis provided the participants with good advice, such as using their current financial counsellor, since the chance of obtaining a commercial loan is higher if the bank knows the entrepreneur in advance. According to Merete Friis, the trust between customer and counsellor is an important element, when the bank grants a loan.

Merete Friis further explained the role that banks can play for entrepreneurs. The banks are not able to provide venture capital, but can assist in financing the companies’ operations. The entrepreneurs can obtain the venture capital from e.g. business angels and venture funds, Mette Friis added.

Finally, Mette Friis recommended the entrepreneurs to be well-prepared for the meeting in the bank. In this connection, Merete Friis referred to the Danish Bankers Association’s guide for entrepreneurs “Dressed for business” that, among other things, describes the elements a business plan should include.

As an entrepreneur, it is a good idea to ally with a financial counsellor to manage tax affairs, accounting, financial management etc. Jesper Falk, Partner at PwC, guided the participants through the complex tax rules and provided examples of when a hobby business is turned into an actual business enterprise.

According to Jesper Falk, a solid budget is important when applying for a bank loan. A cash budget is e.g. essential for the frame that the entrepreneur must negotiate with the bank. On a final note, Jesper Falk emphasised, with a twinkle in his eye, that the entrepreneurs should consider the auditor’s remuneration as an investment - not an expense.